Fa­mil­iar dis­pute over Iraqi fed­eral bud­get in 2014 but the Kurds are armed with new lever­age

The Kurdish Globe - - NEWS - By Bash­dar Pusho Is­maeel

Perennial dis­putes over the Iraqi fed­eral bud­get be­tween the Kur­dis­tan Re­gional Govern­ment (KRG) and Bagh­dad are al­most ex­pected. Ac­cord­ing to the Iraqi con­sti­tu­tion, the Kur­dis­tan Re­gion is en­ti­tled to a 17% share, but Kurds ar­gue this is never the true fig­ure.

It was hardly sur­pris­ing there­fore that the Iraqi cab­i­net re­cently passed a bud­get bill in spite of Kur­dish with­drawal and re­jec­tion. This sce­nario is no dif­fer­ent to the pre­vi­ous year when the cab­i­net again ap­proved the bud­get with­out the con­sent of the Kurds, be­fore it was later ap­proved in par­lia­ment.

The 2014 bill sets the KRG a lofty tar­get of 400,000 bar­rels per day and in­sists that all rev­enues are sent to Bagh­dad, threat­en­ing to cut the KRG share of the fed­eral bud­get oth­er­wise.

On the sur­face, Bagh­dad is con­tin­u­ing in its ethos of call­ing the shots, set­ting the ex­pec­ta­tions and a threat­en­ing rhetoric against the Kurds. How­ever, the 2014 bud­get is drafted and passed with the new AnkaraEr­bil oil con­tracts and new in­de­pen­dent Kur­dish pipelines firmly in mind.

Bagh­dad has been ratch­et­ing the rhetoric against both Kur­dis­tan and Ankara in re­cent weeks with Ab­dul Ka­reem Luaibi, Iraqi Oil Min­is­ter, even stat­ing that the govern­ment was pre­par­ing le­gal ac­tion against Turkey and would black­list com­pa­nies im­pli­cat­ing in such agree­ment with­out the con­sent of Bagh­dad.

Bagh­dad has al­ready sum­moned Turk­ish con­sul in Bagh­dad to voice their dis­plea­sure and ac­cused Turkey of preventing Iraqi oil min­istry rep­re­sen­ta­tives of su­per­vis­ing ex­ports at Cey­han.

Luaibi fur­ther threat­ened to boy­cott Turk­ish com­pa­nies and can­cel con­tracts if oil ex­ports went ahead. Iraqi Prime Min­is­ter Nuri al-Ma­liki had al­ready threat­ened to cut Kur­dis­tan’s share of the fed­eral bud­get if oil ex­ports via Turkey went ahead.

Ex­ports from Kur­dis­tan in re­cent years have been stop- start to say the least owed to fre­quent dis­putes with Bagh­dad over pay­ment of ex­penses to oil com­pa­nies and share of rev­enues.

The cur­rent bud­get dis­pute may be along fa­mil­iar lines but is cer­tainly against a fresh back­drop. Kur­dis­tan has new op­tions and new lever­age to use against the govern­ment. Its ca­pac­ity from new oil pipelines are set to rapidly in­crease and be­fore long Kur­dis­tan could re­ceive a lot more from their own rev­enue sources than Bagh­dad could ever give via the 17% share.

This new ar­row in the Kur­dish bow em­pow­ers the Kurds to have con­trol over the des­tiny. KRG deputy fi­nance min­is­ter, Rashid Tahir, warned that “ac­tion begets re­ac­tion; if Bagh­dad cuts the bud­get then KRG…the Kur­dish lead­er­ship will make their own de­ci­sion.”

Ex­ports from crude through the new pipe­line were on track to start by the end of month and KRG were invit­ing bid­ders to reg­is­ter with Kur­dis­tan Oil Mar­ket­ing Or­gan­i­sa­tion and not the State Oil Mar­ket­ing Or­gan­i­sa­tion as de­manded by Bagh­dad.

What would KRG do if Bagh­dad cut their share of the bud­get, failed to pay Pesh­merga salaries or amounts due to for­eign oil com­pa­nies? Sim­ple – they deduct owed amounts from rev­enues set to go to Bagh­dad.

It re­mains to be seen how Turkey would re­act to prospect of law­suits from Bagh­dad, but Turkey is al­ready neck deep in Kur­dis­tan with bil­lions of dol­lars of trade and is not about to aban­don the KRG. It knew the draw­backs of up­set­ting Bagh­dad, strate­gic reper­cus­sions and is aware of the hand af­forded to the Kurds with the new ven­tures.

How­ever, grow­ing eco­nomic, po­lit­i­cal and strate­gic ties with Kur­dis­tan is win-win for Turkey. Ankara re­alises that ul­ti­mately the in­de­pen­dence dream of Kur­dis­tan can­not be held­back or ig­nored for­ever, but it serves to gain, not lose from the Kur­dish na­tional re­nais­sance.

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